the Digic4 processor is much faster than the Digic3. but even with the faster speeds, the 5DmkII still needs DUAL Digic4 chips to process 1080p video at 30fps. the 500D with a single Digic4 can only process 1080p at 20fps. It's very possible that the Digic3 could run the 500D firmware, but not have the power to process the video, even at the 720p mode.

Digic 3 is capable of at close to that resolution, even on some P&S cams. Even the lowly TX1 was capable of 1280x720. However, even if the CPU/DSP is the identical for all Digic of a given generation (which isn't confirmed AFAIK), the CPU/DSP core is only part of the system. Buses, memory subsystems, IO subsystems all matter.

In any case, you wouldn't be able to just copy the video recording code from a different camera, and certainly not one with the major differences pointed out by DrMookenstein.

A G9 is not identical to any other camera, and certainly not any DSLR. The DSLRs and P&S have little in common. They use the same OSes and CPU models, but the "application" that does all the camera stuff is totally different (I suspect two completely different codebases maintained by different teams, with some libraries shared between them). Even if the CPUs are the same, the rest of the hardware isn't. Even if the rest of the hardware was compatible, you couldn't just take one part of the software from one and expect it to run on the other.

The whole idea of "just" copy/porting major functionality from one camera to another is a non-starter. If you don't believe me, you need to spend more time disassembling firmware dumps.